CTA Case No. 3405 (Decision)
REPUBLIC OF THE PHILIPPINES COU RT OF TAX APPEALS QUEZON CITY PHILI PPINE OIL DEVELOPMENT CO., INC . Pe t i. t io n e t' , C.T.A. CASE' NO. 3405 THE COMMI SSIONER OF INTERNAL REVENUE. Rc:>s oond e nt . H --� _.. --- - -- x DEc I s I DN T h i >.; i s a n a o p e a 1 i n t P t' t:1 o s P. d b y t h e p e t i t i o n e r' f t' o rn t h e de r: i s i on of t'esoondPnt demandinq oav ment of alleoe d de f i cje n c y in c o~e and withh o ld in q taxes for the ye a r 1975 i. n t he a.mo unts of and P18, 7 87 . 14, t'e soect ivelv. in c lu s ive of in t et'est an d s�. tt' chat' g e. P h iliopine Oi l Development Co . , I nc . i s a domestic cot'D Ot'ation engar;:~ed in the oil eyn10~ ~ tin n bu s iness wi t h Pt'in c ip al office in Met r o Manila. [Admitted in the Answer.] .It is man a ged bv (.). i ts oene r a l ma n a q er. P p t i t j n n P t ' ma i n t a i n s . i t c; b o o k s n f ~ r' r' n ' 1n t i n t h e e. c c t' u a 1 b,::> r:: i c:. F'n r' th e veat' l 37 5 oetit ionet"' s only sotJ t'c e o f :i. n;~ r "''�' c ome s f t�'n m t'e ntal~ sales of sc:t "' c~\0 14 0
DECISION CTA CASE NO. 3405 2- No i. nr. o me wa s del�'ived f t' om its Pt'inciJ:lc-\1 bu si ness si n c e no thinn w~ s orodured fro m the expiorati on of oi l. F o t' t h e f i t' s t . [ Ex hs. A ~ A--1. and A �- ;:::~ . J On Ant'il 19, 1':371:,, nP.ti tionet' filed its Ann ual Income Tax RetUt'n fat' t: h P v e :=\ Y' e n d i n �.1 J) e c e mb e t' 3 1. l '3 7 5 � [ E x h � B. J Petitionet' t' f.>OOt' terl a t otal income of P1.,50 i?.,35 4. 0 0 rsee Sr herl t.llP I, Exh. The sum of Pi ~ 7 95. 780.00 as general a n d ad mi. n i. s t t t' i3. i v e e x o e n s e s [ ~> e e S c h e d u 1 e I I , F.: x h � B- 3 l WPt'E' HFlvi n o suffet' Pd a loss. oetitioner did not oav any tax clue the [Jove t�'n me n t; . The i ncome and expenses fat' the veat' 1975 at'e ~ct1 ~ d u 1 e �- I ( EX hi bit B-3 ) PHILIPf.:.�INE OIL DEVFUlPIVlFNT CDI"IP(~f\IY, INC. 1975 INCOME TAX RET URN J Np1 t'r1E <LC S~:i > F RUtvl . UTH'=-FLfi!J J~_C~~ T n t. P l�' P c. i~ J n r n mp 147!877 171 , Si?O H on n (On n anri S h ."\no h a i Bani< i n n C ot'o. P ~v~l~ Jnve s �mpnt; ~nrl n evPlnnmen t Co ro . 6 1,539 ~:;;3. 87 5 . Phi l~ooine Amer i can Investment Core. � 3 00,877 f"'~":'P S0ctw :i. �!;i. e s Cot' D. 163!880 233, OfVf r��-1 i. L Par:' if i. c C _. pit e":l.l Cot'P� 77! ~': 3 4 P ~ nrnm OPvelnnmPnt Co rn _ nEA Develonmen t Corn. n t �-1 , r' <; P 1 ~ 21. '3 . '3B f ) 14 �,
..... - DECISI ON CTA CASE NO. ~405 - 3- Inc ome fl ~ o m Rent 32,275 Sale of scrao mat erials, SSS 101,938 commissions. etc. ________]E1..~...l;i;=i_ Incom e from Tiwi Project Total S c:;_b_~_<;:L�:~1 _g__ J I <Exhibit B-3 > r.:'f-11 LIPPI NF (J T L. DE VF L.D P M!=:: NT C!JfYir)r~NY ~ INC. 1975 INCOME TAX RETURN Mi"\naoemeni: FPes P 1 ;=~o, ooo Sa laries and Waoes Postaoe, TeJ~ohone and Teleoram 4C::E. ,-'"-359 Stat i onat'V and Sun n 1 i e s 51 , 3F,e T~xes and L i~enses 40, 077 Medical and Hosoital Exoe nses l_er]al and Audit Fee 1' 187 Tri"\ vellino Fxoenses 15,811 Fr Pinht anrl HanrlJing E xoen ses 25, 9 70 Do nati~n and Reoresentation 51.' 9 ~=~;::: Powe r, Lioht and Water Rentals and Lease h old Improvements 3.,255 Rena irs and Mai nten a nce Intere~t Exne nses 70,154 I n s r_w an c e an r Bond c; l Lt-7 75A Bonus 139,053 Deor' ec iat ion 37 ~ ;:::~;=~9 Advertisements and Annual Reports Hotel Fxnen~Pc; 6,935 Mi"\ns, Blueorints a n d Reorod uctio n 7,708 s I Ill rl t '' y Br< n 1.( r~ h rl t' f1 p c; .33,'300 50,411 Canjtal Increase Reoistration & 24;:::, lt C.~ 4 ' 1 1.639 nth ~t' Fxn1=1n ~ e s 8, 74-5 SSS Premium , Medicare and ECC 5, C:: -4-0 Su nrl ry St nrk F x opnc;p c; IYii r.:.cpll.:~npo r lr.; r-}(rf'nsPs 115~ 538 TPM Se rv ic e Cha roes 1q,427 ff-FirP EH nenr:;es ;:;:;~, 4A1 Snorts a nd Re creati o n ~:::tg , 194 Tot a! 1 '3,bE..l :1. 3 , 985 14 0 ----"t~_f':!..:;!!t
DECISION CTA CASE NO. 3405 - 4- On APd.l 22 , 19 81' petit i onet~ rPs~nnrl~ n t a n assessment notice and letter dated Ap r i l 13, 1981 fo r al leg ed defici e ncy in c o me t ax of P428,69 7. 60, d eficiPncy wit h holding taxes of P18, 7 8 7 . 14 and P3 0 0 .00 as c o mp r omise pena l t y for non - filino o f a u~ r terly ~etu~ As for t h e f i ~~ s t , s e con d and t h i r d q u a~, t e t~ s a I 1 f o t~ t h e y e at' � 1. 975. CE xh s. c, c-1, C-2 and c --3 J Ho v-1evet~ on Apt'il 2 8 , 1981, Pe t it i onet~ received ft~om the BIR a lettet~ dated Am'i 1 15 , 1981 informin g th e former that it had � no defic i e ncy fixed and p ercentag e t a xe s for 1975. [Exh. D.J Re spondent dis allowed some items of deductions and added as part of .petitioner's income those alleged to have The alleged defici e ncy incom e t a x fot' 1975 was based on the follow i n g co mp ut at ion s= [Ex h. C . J N~t los~ oer r~t urn ��� ����������� ���������� IP294 42&.001 llrld : Lln <~l! o~a bl p Deduct i 0!15 & add it i 011al I11 co�e: Ia) Aerts. Rpr'b l ~ on rental of aach inery &eouio1ent p 30,000.00 Mobilization cost fro� Iloilo to Tiwi, Albav ... 33,000.00 lb) Sa les of Carbonate Studies 466, 290.00 (c) Undeclared inc. fro1 sales of scrao aaterials: . Total incou.. P1 03,028.% . A ~t. reoot�ted oer ret urn ... 19.1!938. 00 1.090. % (dl Vari ous unsuooorted exoenses 359. ~.02 (e ) Donntions &r e or e s e nt~t � on exoenses luns uooortPdl ... -� 7! !200!50 ----~93 .<,!~_Q!_'f!\ 14 v
DECISION -- CTA CASE NO. 3405 Net i '1t"l'll!' ' rrpr � ~nvpstigatio, ��;.; ;-.; .... .-.-;-;; ; P�E.6,5'~. 4B I cose taM due thereon ���������������������� P233!280.00 Add: 50% StJrcharge ................ ;........ 111 , 640.00 14~ int. fr. 4/16/76 to 4/15/79 ������� 93.777.60 A~UNT DUE AND COLLECTIBLE ������������������ ~428,697 .60 L.il<ewise, fot~ the C\J.leged failm~e of p!=!titionet~ to rem i t the correct amount of withho ldi n g t~xes on wages for the second quarter of 1975, respondent assessed the amount of P18~787. 14 , reoresenting alle ged deficiency withholding tax e~ for � 1975, inclusive of surcharge and intere st, comfit .d~ erl. as follows: EExh. CJ Total tax withheld for the quarter endinQ June 30, 1975 ��������������������� P 24! 682.72 � Less: Re ittance for the quarter under ORJ 795618 on 6/9/75 ������� ': �������� �� .P7: OS.?. 55 OR#796105 on 7/8/75 ; .... ..�.s.~!.O; 15 _l~.~~�~.!..zg Deficiency wi thholding taK ��� ~ ���������� P 101820.00 Add: 5% Surchar~e ���������������������� 541.00 12% int. fr. 7/26/75 to 4/15/81 ��� ___]~~26.1g A~~UNT DUE AND COLLECTIBLE ����� ; �������� P 18.787.14 Cln Aoril 30, 1981, petitionet~ pt~otested assessmPnts. [Exh. E.] On Decembet~ 2C::, 1981, petit i onet~ t' eceived ft�� om resoondent a letter da ted September 15, 1981 statinr,J that a t~einvestigation of the case bannbt be had due to its t~efusal ~'to ' execute and sign the Waiver of the S tat ute of L'mitations . Resocindent ther efore dem anded naym~nt of the assessments above-mentioned. EExh. F.J On .J;'\ n iJ at~y 198 ~~ , petitione>r~ f i. led a ~ et ition f fl i' ., e v i. "" w s e e k i n o t h e can c e 1 1 at � on o f t h e as s e s s mE.! n t s i s s �u e d b y t' e s r on d en t � 1 b ()
DECISION CTA CASE NO. 3405 / ~~s � � an � �aff� ir mat-i.v ~ � defe-ns-e, re-spondent cl<aimed that +; h r.> .::\ ssess ments wer~e issued in accor~ danc e with law. He added that the amount of PEA, 000.00, representing accr�ued r��enta_l income fr~om the lease of machinery and equipment, were no t - ~eported as income by petitioner. In like income fr~om the sales of cal�~bonate stltdies and sc l�~ao materials were unr~eoorted and underdeclar~ed. The deductions claimed by oetitioner must be justified ~nd s ubstantiated otn'suant to Section 30 '(a) <1> � of the Tax Co d e. The expenses incur~red in the United States by the parent company and later c~arged to petitioner by ~ � debit memo are not deductible under Section 30( a) <2 > of the same Code. As t"eqar~d the deficiency withholding tax for _1'375, respondent all~ged that petitioner failed to pay the correct amount of P 24,682.72 givino rise to th'e assessment of P18, 787. 14, inclusive of and surcharge. Petitione1-~ was chat~ged �to pay the compt'omise penalty of P300 .00 for its failur~e to file its first, second a nd thit�� d quat'ter~s in c ome ta.x r~eturns for~ 1'375, - iry v iolation of Pr~e sidential Decree No. 30 dated October 27, 1'372, as by Revenue Re g ulations No. d ate d Dece m be r~ 1 , t '372. T~e fssues raised are: 1. Whet h et' or~ n ot oet it i onet" is liabJP. rlr.:>fjripp ry incom e and withhol. rli n g taxes for~ 1'375 in t h e a mot..mts of P 1~;:: 8 . E.97.60 and P1B.787 . 1.4-! r e spec tive lv: 1 5.i
DECISI ON CTA CASE NO. 3405 -7 1�-..:� - Wh ethe r o t~ not petitioner is liable to oay the e; s 5()':,{. fl�~aud and tn~ch at~[] �,� Whethet~ or n ot petit i onet~ is liable to tJay the -~ . '�, co mot�o mise penalty of P300. 00. Un the first question, petitioner clai ms t hat the ass e ssmen ts lack leqal and factual basis to stand on. We sha ll first discuss the disouted Deficiencv Ihco me rax f-lsses sm e nt fot~ the year 1'37:'i in acc o rda n ce with t h e item s aooe ari na in the assessment of responde n t. J 1975 Deficiency Inco�e Tax Assess�ent: <a > Accou n ts Receiva~le on rental of mac hinerv & equipment P30, 000.00 Mo bi li z ation cost from P 33~ ooo.oo Iloi l o to riwi , Albay --- ---�- .. �����-�-� ��-�-����...... �-��- -~ -- ... ..I...�-� ���� �--��--�- �-��"~--�- ~-...-�--- -�-��-�-- - - .. --�----�---~-- .. !3ometime in January 1'375, petitionet' , s u bcontractot' , .L er.~s ed and equipment in favor Lo r ooration , contractor~ u::xh .: G. J Th e parties aqreed that the machi nery and equipment l ocated i n Ceb u and Iloilo shall be delivered to Tiwi, ~llbay f o t" the acc ou nt -rhe subcontract aqreeme n t to o k e ffect uoon a c ceptan ce of the eouipme n t appt"oximately July 15, 1'375. J.t was that petitioner-subcontractor sha J. l b<:' nal.d the amou n t of P30 . 000 .00 mobi 1 izat ion cost f c� r~ th e tt~.::msoortat ion of the equip me n t an cl its r.~ cces sot~ ies. LExh. G-3. J It was further aqree d that 152
DEC I SiON CTA CASE NO. 3405 - 8- on P. ���-ha J f nf o n e mo nth' s t'ent (P33, 000. 00) shal J. be paid upon satisfartor y delivery of the e q u ip me nts leas~d. CFxh. On July ;:::0 '+: 1 ':T75 , r:ietiti.on~t' sent Debit 1\!nte Nn. 7 5- l U� d at e d ,ht l v ;? L~ � 1 3 7 5. t o Pars on ' s Cor f1 or at i on c h ""r g i n D t tH? J �':\ t t e r' f o l ' th e f o J. J. ow i n q i:\ mounts : [Ex h. H- J � 1 Mobilization cost from Iloilo to Tiwi , nJbay p er nrt icle 3 of Subcontract � No. 1 --� SC-5451--L, P30,000.00 50'Y- f:td vance R P. n t ~"':\ .1. f n t"' I t e m s 3 � l , ~3 � ;~ , and 3.4 ,7..J. ":? Pe>r' E><hj. bit " B" No. 1.. 5 .. ~3 1 _ QQO~_q9 Total ,_J ~~ 3. ~- 1?_s,~) ~- s~~=~ in the book s of peti tionet' , as follows: [Exh. HJ p nr�t~n!_ IT'1t:c; Rpr~ p i V .!~h l PE, ~~ (l ( H) . 00 Other JnromP-Tiwi Pr o j. P33,000.00 30,000.00 RD-1 P13,000.00 BD-2 9,000.00 FT-1 6~000.00 ..!5_, (H)(I~ Q(l f'3310(')0.00 S l..l s pens e (=\ cco�Jnt T n t'' e c o t'cl D P b i t _ No t e s e n t j; .o r� 81 t'' c, o n ' s C:n-'�.HH''�::Itinn t'ern-Psr=>nti.no 50'1. Advance Rl?.ntals for fvl n c h i n e t' v IF r '�' j n men t and Mo b i 1 i z at i on Co s t f r' o m I loi lo t o Ti wi. f=!lh <'-'1 (,1 as pet' atta ched . Re s oondent contends that petitioner failed to declare 1 �"-' n :I i n r ' ~1 ' t d P as o r.n' t .o f i t s i n co me t h e mo b i 1 i z at :i. on r. n c:; t o f the 50'1. advance rental of P 33, 000.00. -~ 15 0
DECISION CTA CASE NO. 3405 - 9- l' P. c P i v ,':\ b 1 e ( i. n .J o I..W n r"l 1. E n t t' y No � 15 '3 ) , h a v i n q ad o o t e d t h P. a cc!�' �..! P1 l basis of ac.cou n t i nq. In the acct"ual method, all incnm P And exn e n c; p s C.H'P t'P.COt'ded the mo ment the t'l ght to t �� e c e i v e a n rl t h P n ~J J � o a 1: i o n t n p F\ y ~ t' j s P c; � P e t i t i o n e t ' s t r-essed that the t" ental inco me of P 3.~-'; . 0 0 0 .00 <not P30 . (H)O~ 00 as declat'ed by t' e soo ndent in wa s actuall y declared to form part of r:J t'O SS :i. PcnmP.. Dut"i.nq the heat'i nq of this case. oetitionet' was .; h le to i\dduce evidenc e to prove tha t indeed thP a mo�Jnt of P33 , non. 00 !�'enta l i n c ome was actually decl a t'f~ c' anrl rP nn r tPrl in its qrnc;s income. Cln AurJ� .t s t 1.11-, 1375 , oeti t ionet' sent aCt-edit Note to Pa1�' so ns ct"editi.no the ;:~mou nt of P33,000.00, t'eprese nt i n g 50'1. Adva n ce Renta l. in it s fa vor. [Exh . H-3 . J f.::n tt' y __ 1\1 o ._.....?0'3 wa s P n t e t' e d i n t h e b o o k s o f pet i t i on e t' t o rever se the orev i ous entry, as fo ll ows: [Exh . H-2 .] nthP0 TnrnmP-Tiwi P ro ject P33,000.00 P33,000.00 Accounts Recei v abl e - Others To record Credit Note se n t to Pat"so n s r orporAtinn for 50'1. Advance Rentals of Machi n erv/ Eouioment as pe r attached. Dn Aunnst E. , 1975. oe titionet' sent Debit Note No. 75- 1 ' f rF~>< h . H- 5J to P,:\t" s on' s in the amount of P5 0 , 0'3'3. ;:.: o. Dn the Si" fl' P date , oetiti on e t' t' ec ot'd e d the t t'ansaction in its
L' EC I S l ':!l'-1 ern e ns ~ ~~- 3405 to - f�1 ,.., r� 1' " �.t n c-1 r> 1�� 'f f' � 11' n ,"\ 1_ r.:- n t ,.-.v I\ I n .. ;::: 1 :~:: � t h e f " 1 1 c1 vi i n n ~ r F )( h .. H -- Debit P 50. t)'Jg .. ;=� r-) C.'thr.�)�" :r n<... o 1'1 " ' .. T; ,.... i. !:<�r" D i f'f~t l l l n 1 ':1. r ["' �1 1�," (o /! r 'l. (l (l D � ';' 17 ... r'\ T) �1 r, ,,' �1 ;�:�(! .. ')(l I" T i C I ��It C. U1Yl. 0(1 1 r..~-... � 1 -, .... h " {, ') ') " () u J , ( ! 1_) 1}. 'JI_) nc1n. no "I �� )'' n(' 'l'> ) "�l i n r.,h�j� �: l' ln+: r:> tn r:'io\l'' '; on s l.._: p)���n .. f' DY' n h f' f'! ' I �j I) lfl I'' f1 1. ' I'. I �'' ( . 1 �1 P )'' \1 1 '0' !'1'~: o"\ c; �f (1 )"' t h P. T'] p t' i. ~~ d .J 1\ 1 v i �7 :-c I .. H-�;-,:'"� ��'�1' iJ n cl whe n it :' "~' '1 '"'11 t; ! tp i.n n �tP.stinn .� d i .-1 nn t: i_nr�p�,�� no"'e ar�~v ohiec+;'i.ons to the admis s ion of r- >~hc:. � 1..�1 (J�Fn .1. (' ) " H--3 nuqust. l r:375) and ~ 1- �.5 hv N�) .. whirh WPI"'P nr.l:; 'i l': .; n n t:!''' <;. I _\ ') [:lfl)�'t Df i l;s cl':e:i. m t h ;.-d; thP. '"�mount nf i n ; t c; i. n c�om e .. c o n t; 1�' a 1�' v t n t h P c n i. ?'~ .; ( 1 n r' r~ r�� l�, (' f:: !') ,.~ P ~ 11�l-; h i'tt tho s2.1T' e ~"a<:; �. !n t-e n nt- I" Pr l .. JOJ..'.l ' n .:'t.l. Fn t t' V N o. ;-: ''.l '] r�� evet'sed t;h�e Ot' i. r.:!i na.l. entt'Y in l n l l ) 'T'l,-,. : Fnt: 1�� v I\ 1D . 1 :=.;9., B ut the ~mount nf rant~l i n rn mn o f p .., ( �, "~ 1'1 (\ . , .. , � ' J .-1 ,.., �1- 1 : ;'1 'I_ f o r�� m�~ n r.n' t o f o t h e r~ i n r n m r.> f t' n m T i '"' �i +: v :t ;::: " !."�' . { I �: .. ,.� I- 1" .., -:� . ' "''. �! "�' , :1 i ,.. ~r {" ' '� )"' n c"'l 1 r.~ n 'r' N 0 .. ;�~ lb u
DECISION CTA CASE NO. 34 05 . - 1.1 (l' ' ' -, hP ��1101h �i :t :i ,:� ;.'It �i. n n co s t of P30. 000. 00 Cnnt c. :;;-:; . Cl<"lCJ .. th'" r:f of the Po �. t i n tn e 1~ !; The amo unt of P 26. 017 . 08 J (~ ,,, s e ~: t b v n P t i t� �i. o n e Y' t o P "' Y ' s o n s � f)�~ 0 In (": P h I I f: Cl fl-!; 0 fl � -r n y� [ 1 .l D :i. ] (' t: f) F: ){ h s � I �- ;=:, T.._3. I - I+ Fl n cl I -- 5. ] j_(o<J :i " :1. I:J �"'� I .._ 1 ' r:�e ~: .i. t :i. o n r' ,.., a 1 s o D '"' i cl f o ,.., t h P i n s twa n c e o f t h e P o ' .t i n me n t s t h~ d p :1 �j v p ,.~ v of thr.> mach in et~v a nd e cJ 1..1. i r.~ men t ~" . no p ,..,_,.�-sons t''E'imbi.J.t'' S P d the amo�..tn t of P30~ 000. f ,:>. v (\ )�-� nf D c t i +; i. n n e t~ � [ E xh. I - 7, Rece iD t Boo~< C - . J' 'l l ' l C P the mobil izat ion co st ~'-la s an expense by net j t i nnP r�' t':l.l'l rl 1 <.>.t Pl~ t~ e :i. mb ,_w s e d by Pat~ s o n s, the F\ITIOUTlt nf r:o :.~r.1. (>')!::\ .. (l(l d o e s not for' m oa t~ t of income but r�-at h et~ .=\ t'v' nm e xoense. The mobilizatio n t ' e i mb tn~ s e me n t fat~ t he 1:: ,., ;." n ,., r ' n ' , !� �'�' t i I" P r, o "; t; n r' '-;.-'~ i cj e q u i p me n t s .. P e c:; n n n d P n t t h P t '' P f rH' P c; h o 1..1 1 rl n o t h ~ v P. r:: n n <:; i d P t~ P cl t h i s i P r�� " m"' h <-� r~ ;.:o �.t c; P t h p c; A mP wa s n e v e t' c 1 a i me d b v o e t :i t i CJTl e t' .=-, In thP ,., r:> �i mb �.n~ s e men t o f thi.c; fY'OITI th e exnense t3CC01Jnt of I l f ' 1: ' 1� :i 1'1" ,.' )"'., l' l n l.. f linn l!J i" ' '� n t 1 inp<j f t��om t hi ~-, t r�' ,':\ n �; a c t i o n. lb G
P t::C: I S ION CTA CASE NO . 3 4 05 - 12 - (b) s~lPs of C~t - bon;:d; P St:urljes P 4 6 6, 290.00 I ~ f' : I ' f ' , ) l I f: T , 1 'I �:�><�' I ll! � tJ Pl ., ltl i�l n c nnc:luctr~ rl ,;~ n invc�~ s t iu.::\ �1:; inn rC Hh . l., DII-~ ... , \ .. ,, ,... ,., , : ... " r +: '"' n n ~, '"' ,, e cl f ~'' u m t h e t'eCOt'd that in 1 ':37!::i' !"''I ll )( :r l r.; n �1 r! �i. t c; r:' ,:u �� h o n r.>. t e studies tn Phi. l 1 ins !'1 ,7'1 (: l "' ' ') 1. f:'I I ITJ r~ nmrv~ n v ;~ tn t,,l ;:'1 m n ltn �f-: nf '); f.'.. C, " I ) f) 1. l " ( )( 1 (H' r:�11(:, C, , ;::�'=} 1) " ( )(.) � �r h :i. S t D t C:\ .[ .~IJ!lOUnt ,,_. ,,,, n ."' id fJ\1 r��h �i. l l �j nc; t:::�n �l: t' n l Pttm Cnmr.Janv on ,.T 1.1.ne c:; . 1 9 7 '"'i '" �1 i rl P n c e d h v P 0 DC 0 ' S 0 f f i c i "' 1 ri e ce i ot !'ln. :t.Lr::. n;:::� r l t'\l: P rl .Tt.tr1P 5. 1.<:.)7~. Th �i c; tt' ,"'nsrir.tion 1.-'J n. c.: e��Jt P t'e c:l i n the cash J�"Pc e:iot int .n ' nril n o"' n r.> ;:��~; ,:- n r j ~. n t h e � !:3 ~~ n <" t�� <:\ .!. L e c:1 q e t' u n d e t' t h e a." c n 1 '� n t t i t- I f' d ' r! t h P t ' l n c n Ill P SA ] P c; fl f f-) r. t' i'.\ r:J S rvt, t: t" l�' i r"'~l'�' � p t ; r . . P'+f.F., .;::�go . � OO. ' Fo1�' rlP t ,::~. i. ls. <;r.> p � ,..IP t �� l�<<; t\ r..� r� �t� Jn ,<:>t'f.r p r: l F� >r h i h i t - � 3 . F: r Y' i. n c I:J ''' e t �3 >< o '-' t' r:1 n s e s � Prmr n L"'; 1 Prl t; r:~ , ! , , r ' I ,.., 1� ,., ~: h P r._,"' i cl s a 1 e s a s o a,.~ t nf . it: c; i n co me in l h e t ol~a. l. .::tmo�..m t o f P ' f L h. ;=:9 0. 00" ~3o m et: :i. me in petit ioner hir ed v. o; 1- 1 w l v n t ' r ' ,,.,_ ~' h n n '"' l P c; o 1~ l i. m p s t o n e s � The cnnt r.=:~c t was f or a VP t:':\ 't-"" he oinni.n o r.hief rJ r>. o J n n i ~:; 1�: tt-l e t�� e ,7.1. s s i n n e d t r:J '"' s s i s t t h e c o n s IJ 1 t an t . Dt' � '"' 1. c; n b i. Y'E'f:l and f i l�'c;t -r.l C\ c; c; m i ,.., ' � n 1 ., '':' 1 ,.., n n I�� n I n r 1 i r.; ~- . or <; n< �c: i ::� I i ~� �j nn �i n P '"' �1 ;.> r:>n t o q v o ,., the ~> t: t.tcl y fo s s i ] r, in ,- <:> l �"'� :� :i o n t n t IJ r d P. t: e t ' mi. n ,., t i o n o f t h e a o e o f �"' t' o r ~< � n l b.
DEC I S I ON CTA CAS~ NO. 3405 - 13 - \ lr.; hv not i t i 011P t"' ' S witness, th e the oi l e>< r.:t nt��a i:ion �:.se d hv oil comoanies .. T he s econd is [; h :~ s e �. �.; 111 :i c f: >~ r >I. o 1�' a t :i o n .. The study will evpn"t;q,"'lly ler1cl I� n t !�1 r> n t �� ~"' r I i ,-. +: i n n n r n i n n s �; i h i l i t i e s h e i. n f1 n t �� P r.; "' ri t i. n Ft��� nm 1.'1 7 0- t975~ r: i) t' () 7 7 :i. � The excenses related to this s '..l n n rn- t- P d h v P v i d e n c e c o n s i s t i. n r.J o f t h e U f +"' i. c- 1..? . l. r< e c:c~ :i. C' t �; � ( :"" .:; h V o c 1..t h e 1�' s , C Fl s h n �i �; h u t~ c; e me n t s P. o n 1-< '+ . [ A. n cl .l n 1t l�' n ,:�., ., B o o 1-< s -r-�t�� o 1'- l '3 7 0 t o 1. '3 7 E >< h s � P - l -� a u o t o P- 1 -v vvvvvv v v vv v v v. i T1c 1 >_t s j_ v e of theit~ submat-~<inos. which L-.J P t ' e n o+; o b i e ct e d t o b v ~~ P. soon cl en t. ] A su mm a rv recort o f t ht~t st udv was o t' e o '"' r� e d .:.\nd subm itted to o e t i t i on e t' � I:F >< h s. (). 0 ��-� J. C1 ��-�;::�, fl--3 . IJ -- It�. 0-�� 5 and 0 ��-E.� J -~;. �-~, :1.375. oetitio ner e ntered in a joint 1�.. � I 'I V Er>t ��r� c a n t' P e me n t vJi th P e t t~ o 1 e �J m Co mp e':l.ny (Ph i. l ) i o c; shot't ) , a l.l - S. A . +: h 0 r.::q-, i 1 �j n n �i n e r.; in th e Centt~al lJi sa yas ( w :i t h :i n t h e 11 (.h- e '"'� o f IYl�_t t l.l ;d Tn t e t' e s t 11 i n conn e c t i on w i t h ) .it�; n:i I P'! Cll. or'�':\ t;i. o r>. U =.:.>< hs. 1\1 .~1n d 1\1 �- t . J c; !���, ."\V' P thP. P.><nensPc; in ca t't'V in o out the p~��p �_���.'"l":' "� i.~ J�: hP ~-r~+; io O"f 70~ :~ n. c: l ~~; h J 1 I .~l !� f .' , -1 p n 1"� .� :;�r ' fl. ::. !. " :.1 , .: �''l 15 0
DECISION CTA CASE NO. 3405 - 14 - f "' � +; i '> P ' 1 :i �r. :1. 1 r r; ,.., r> �~: n o n �i 7 P s t h e c o mD 1 e t e d c at~ b o n a t e By th e terms of the Jni n t l.J ;.:: n t: '.:~ �� P f.hn� e o mC' n t: rY .'<il � l\1- 3 J , P h :i. l 1 i p s p a :i d t h e a mo u n t o f ;,~ c: c n mn 1 P t e c r> mr.1 P. n "' i'\ t i o n t o o e t i t i o n e t~ f o t�� t h e c o s t o f s.~i d c;t;udv. The F'ltnnt.mt of Pl+f,f., i.=: '30 . (H) did not fo1�~ m oat~t n f' P 0 +� ; �i�: �i n r ' ,., ,.. ' r; i n c o me h e c r::l l..l s e t h e s a me w a s n e v e t~ c l a i me d Thp 70~ nf the exoe n ses i n curred for the ~i'\rhn~~~p stud v was r eimburs ed by Phillios. nnd �;inc e th e of t h e n �f Deti.ti on et~ no oain should be (c) Undeclared i n c om e f ro m sales of scr a o ma teri a l s : Total I nc ome P1 03, 0 28.96 Amount re o or ted per return _101' ':33$ . QQ P1,090.96 r~ p r: n 0 n d p Tl I~ c '� rO:\ i m5 t h ;:\"!; 0 e t; i t i 0 n e t~ 1.1 n d e t~ cl e c l i':\ t~ e d i t 5 i n co me f r � o m s c ,.~a p mat e t~ i a 1 s , SSB commis si ons. Ill ,7.1 i � h P ITI ,:~, �I~ �j r.::) �1 i n the a mo un t of P1.090.gf.. n rF~ I�'PCnl-�d . J s hcn-J i.nn '"" t nt al income f l~o m sale of sct~ao in P r::� t �i t i. o n P 1�' in i !-: c; rn'n t P c; t st.=~t:ed it s hall 15~
DECISION CTA CASE NO. 3405 - 15 - (">l u t' 1: c,; :i. n c e t h :i. s .:1 mo '..t n t i s t n o i n s :i. q n i f i. c <='- n t t o :i 'J s l:; i f y a t h rn�' n ' ' r 1h 1' P 'I i. e \�'>~ ':J f t h e Y' e c:: o t ' cl s t o ~- P. c o n c i l e t h e s a me � n!,~t i +; i. qn e\' :i. n i. t <:; �-=~llerJed tha~�; the c?.mount of PlOt, '338. 00 was the COr'r'ect d mo �J r 1 l: c f ~'� a 1 P. s n f s c r�' a o mat e ,., :i. a l s .. It did not p t' Pse nt ev i de n ce t o sho'.N th at i ndeed it was t h e correct a.mo u. nt. I r) f;,~. ct no mPntion v.Jhatsoever' was made in the memorandum of oetitinner. Jt is therefore safe to assume t; h ."lt o e t i t i o n e r�' is fo1�'Pr.JO i nq it 5 t' iqht to co nte st this ,',l.ITJOflTYt" to ove1��' come the br_tr-'d en of Dt'oof, the F: o t' fai l t..l"r"� e rn' e s tJ mo !: j n n n �'F c en' 1�' e c t n e s s lies with t'e s oonclent. As .. o athered bv resonnrlent' s examiner~ mathematical error wa s t; h e t ' e s u 1 t n f t h e d i s c r�' e nan c y o f P 1 , 0 ':J 0. '3 5 � In vi e w of i: h i. �; f i n rl i. n n , We s P. e n o f t' '"' r..t d b e i n q c o mmi t t e d o n t h e oAr' t of o etit:i.o n eY'. No willful act r.-:; t i 1 l t,.J r-> f i n d t h P am o u n t o f P l ~ 0 g 0 . 9 F, i n ~; i on i f i ca nt t o fin allv ~av there wa s f ra ud in unde r declarin~ as oart of nr>t :i t innPl��' ' s i. n co me c;;=~.id amou nt. In f <':l.ct, the r' evenue e><arrinPl" ,:-,\ c!tn its thet'e vJ .:~s i'\ m;:d;he matical er' t�'or�' commi t ted. T tv.t"'" a n e t'l�' tH"' ca nn ot be.=~. state of mind in committino fl�' 2 �..t d s i n c P i. t wa s n o t w i l 1 1'1..\l act i n t h e f i r' s t � o 1 ac e � The t' e f n ,.., P ~ t h P ~:':i 0 '1. �f ,, ,:.1u d o P n a 1. t v s h o u. 1 d not be i mno s e d ,,., n ~ i 1' ,-:; 1: n p t .�i t �i �. n P t- �
DECISIQ~,f CTq CASr NO. 3405 - 15 - (d} Various unsupoort~d expenses P359,359.02 H ,_, �; f".)" q d n n I; d j s a ~- 1 o li'J P r l +:otr-~l ;:o.mount ' of ~---r.., ,.,,., P c:; "'nt �inn exoense s cAni-t:al i n cl��r.,,., �:; c , -. e q i ~; t r�� at :i. on~ c; un ch��y . stock, and t r� '"' 'I :;' 1 :i. n n � Dostaqe. teleohonP and t r' I. P n 1��� a 111 �; .. f t ' P :i. n I�1t <~ n d h i:"\ n r! .l :i. n q an cl mi s c e 1. 1 an e o u s e >< p e n s e s i n 1 ':r7 ~; w h i c h w P Y' P n n t: P v :i. ct e n c e cl b y i n v o i c e s o r�� t~ P c e i n t s �; h nv..t i n n t h (? n a me s o f t h !"-' o e r�� s on s by wh o m t h e s am e wet~ e ;, TlC' Ul�'' )�''PI':I r"'!l('!/(1\�'' n.':lil"! bv nN~:;ur~ COY'D �� N.Y., U.S.A. for~ rinrl Thp Jn.:->:i.n ty�� t �::. t; of thn dj s,::J,l lowan ce wr~s the fai l.t_n~e o f o e t i. t .; n n P. 1�~ t o s h o w t h e i n v o i c e s o t~ o f f i c i a l t~ e c e i n t s f o 1�~ n. C D 1�~ D 0 r- �3 t i 0 Tl � a s manaoet�� nf netitionet', i:~ D r�� e e nr e n t o n July 1. , 1973 with ANSOR ,::, c e Y' n o Y' a t i o n o r�� o an i z e d an d e >< i s t i n o u n cl P r' u. n. � thP J awc:; of t ilP. Sta te of Dela~-Jat��e. :i n o t' d e t' t o ~3. �'"'� \) ...~ �j l c:; Pt'' V i r�p S n f t h e f~.tllv the t !!l i'�'.n ,:\qp ~, :i.n the PhiliorJines. _By t_h e tPY'InS n f .-~rn� , e m"" n t , n ''.f"; r�11 ~ �; h ,._, l 1 m-~ P v i r1 P t h e f o l 1 ow i n n s e r' v i r. e s j n t hP r ::.-::~ ni'l cl r"\ to AN SC Un ,:md i. t <; m,::~n ,::~qed- ."1 f f i _.., I� (' �in +:hp Ph i. 1 i n n :i n e s �. o P t��t i n en t 16 1.
DECISIDN CTA CASE NO. 3405 - 17 - r) , .. n " �i '�. i n n �i ,.,., r ' ' ' r� �! ,. r~ h r:- 1��� P 'J n r::l e , ., � t n w i t h : 1.. E. >< h � I)-� ;~~ J II ( I~ ) t {.) ::. 1": �; C. in �~ h p r' p f1 j t:; t r��a t i 0 fl () f t h (?. �.:pr-- ' w ' t �i r�.; rrf c~ r)P T ()!\Ifl'r.; � m"'-\ni':\ged-�and-affiliate r:"" r� P ,., 1~, :1 n .i f�~ '�' 'I'J i t h \- 1 P I l . f.~. ;:~ n d I o t' n �=t rl ."\ c; . F. r~ . �"'~ n d !�: l 1~-' 1 i s t i n u o f s u c h s e c ut' i t i e s i n t h e tJ. S. �=~� n d l ,., ,., C' :1 r 1a ~::1 :"\ c..to�::~ ~< ex c h a n rr e s ' h <:t nell e <.: ! � rH..'kho .1 c1 r~t �� l'<" l ,?. t i o n ! ; fo l�' l~ hPc.P cnmn.::~n �ie c; whir~h u. s . c ~F\ v p r: h .;:;n' p 5 t ,., '"'�d {" d i n t h e F.:1. T1 ad a ; i::\ n d I 0 t' n. , .,1�' i':Hl n e d i v i c:' e n cl � n il y 1!1 e n +; s ; t ' e s o 1 v e s t o c k h o 1. d P r' c::. ' n 1.! f' , ., �i P <.; .::~ r d o t' o b 1 "' ms : d t' �'=' f t � e d i t an d c:f i s t t' i b u t e t h P n e c e s ~~ <:n' v "'�n r11..t :q 1 � n 1. ti'H ' t e t ' 1 y a n cl s p e c i a 1 t�' e n !W' I; �= ~ 1. i. c:\ j. s e t�J i t h t. h r:> U , c; � "" n d C ,::~ n ""d i ""n s t n c k �1- t' �""� ., "' f' <�~ , ., n rJ !: n t <; � 11 C01J. ec::tc c:' hy nf',!\:;lJp f'~fl l�' n. I!Jhich fee c; h ,-=tJJ. he PXClUSiVe Of o 1.1 t --� n F - �� o or I�< P t exoe nses by ANSO R and the cwoh!ssion D. l fees pa y a ble to thi t' d oat�� ties ~b_a).J _ I;l~.---biJ.. LE?. d._ Fen�� thP ve :<l' in nup�; t i n n , ~~ 1\l~=;r:m arlvr.\nc~ed r:Ji'~V ments of o l' i n t i r1 (l r-c o <:i t ~; nf certificates a nd books, p 11 ':: 1-;,'::\f!P, 1 a b o t �� c o �; t of t v pinn and l a b e 1 J i n n mat e 1�' i a 1 �; , t r�� �'1 n c; f P Y' f e e s f o 1�' s t o c k t; t ' '"' n s f P t' , fr��ei nht c hat' qe s. tt'r-:l n ~;por�t:ati.o n expenses, pt' O><Y c-, nliritin':l t ' f.' D D y�t S. T h P _ c n t' 1�' P. 5 r n n d ],_n q \( e t ' n \< c ooie s nf paymPnt requests a nd invoices r.\n rl chPrks i ss ued .'\nd ,, ;.>�i d h v W P \�' P s ent to p<=>t it i n nPt' O�.crinn the t1 ��i .3l, petitio ner pre s ented documentarv r~ '-' i. c! ~' n c P tn d i sall ow ~? d e><oenses of
DECISION CTA CASE NO. 3405 - 18 - chec:l<~:; of r!l'.1 ~-~ r �1 r~ L~ot�'o . �N:i.th th e attached payment t�� eque st s ~:w hi. llino s nf t h it' rl n;.n � t:iP s a drlt�'''":;s P.d to AN S CTlR all fot~ -1-; hp A r" c n �..\n t nf DP.t i. t i OTlPt' othet~s XE't'OX copie s of invoice <; c:\nd P t" O ><y in v nj c e s in t; hr,o Tl.::11J1P C1f QP.titionet~. LF>.-h. I~ � ' f~ - 1 to 11 -� l ;:? " f_.', and S �- 1 T , T --� 1 and T-;:::, u, u -- 1 a. l�1c1 U-�:::, X. X- 1 to X_,,-'+' v, 1v1�-�l t n v-- t 7 . t-J 7 W�-�1 t.n W�-'='B , z v ~ V--- t to 't ���-:33 .. 7 . ? -- :t a n d --;::~: ' (-lFl ~ BB and BB -- 1 to BB --- 5 . i n c 1 �..\ s :i. v e o f t h n i. t ' s 11 h m.=1 t' 1-< �i n n s � ResnnnrlPnt's couns e l did n o t o b i e c t t n t h e f o t' ma 1 o f f e t' o f e v i d e n c e i n fact h e We are ronv in re rl th a t oe ti tioner ha s nrPsented ornof to c:. �Jbst a ntiat e the ex oen s es ahove - me.n t ioned e><cept the Mi ~ ce ll a n Pous Expenses. Wi th res oe ct tn the Mi s rPll a neous F><oen c; Pc; related to t he a bove - t r a n sart ions, no o roof was ever cres~nted by t:> e �!; :i. t j_o n ~' 1��, t o Y'P. bt..\t t he f :i nclinqs of t'e s cond ent . No D '"' v me n t t ' e a u e s t s � b i l 1 i n o s o t' c h e c k s i 5 5 1.1e d by A1\1 S rJ R ~o-H~ t' e to o etitioner wit h s to the mi s r E> J. l An P. n '-' "' l< n f' n s e s i n c 1..1 1�' t ' e d b v t h e l a t t et'. Thus, the following in th e Journal Book which f ormed part of the !vJj sc: .., llr>n P. o u <.; F >< n en ses i n th e s u111 of P86, 5'+7 . 8l , i temized be .'. OW~ !T ><h. ,3 � t1. . P J F~ l ' e co t' d . J J o '�'� ,.-�.n '"' 1 Gen. & Rdm. n u1��� i 1 .:~;o r=- n t t ' y "' Cl s .. . ne e o_1..1n t: _ neb i .L?..c:t f;.>< p e f1 s ~ s_ Au r:r . 3 l 72 Mi sc ell~neo u s ex oens e s p � 7 t) Dec,. ::~ l 1.90 Mi c~r'P:I l ,"\ n l'l oi .I S e xoen s e s R.3El.70 Dec .. 3 :1. ,.;; J ~~~ !�I.i �; c r-' .1. J '"'-q e o u s e >< D P. n s e :--; 7E ~750 .0 0 385 Mt~ce l la n eo u s ex o en s e s .1' fq~5. E)�_ P 8C. 5 Lf7. 8 1 T ot '"' .l Un c:. uno o l�' t e r:l ex p P n 5 e 5 -�: �---~ =- :-:-:~: ::::-:. .:::::::: :::-::-_-_~-::::
DECISION CTA CASE Nn. 3405 - 19 - l\I P\''"' ~~ ~�� n��\ r:'l�- 1 v di.~' D .I .l. nt ~�ed hv l '' '' V::>n �..te e><ami. nel�'. (~) Donations 2nd reoresentation exoenses Cunsuooorted}. P 71.200.50 T h P. t ' r:> v P n ,_ ~,~., P x '"" mi. n P 1�' t�J h o c o n d u c t e d a n i n v e s t i Ll ''" t i o n on the t:Jo c1 !.< s q f oet i. t i onet' disallowed the s�.�m of [Fxh s. L <a ) �I o t ,~ .t r> '~ o P n ��; P ~~ f o t " d o n ri t i o n K t' P.r:J l 'P.sPnt,::~.+;ion .. i n c i d e n t a l .C~ ncl misc el l :"l. nP.ol.f.s e x nense s , h>i �l i. c~h '-'I P l ' e i::\CC o unt e d f t��o m .-::~clv," n c t-' c~ to Staff i:O\nd c~ lnt'1 l.OVF~ E.'S, but 1-'J hi c h Wf>l�'e not evirlencPd bv invoices nr l�'P.CF' i. nt c; p -'.:'i, :1.79;59 777.60 ( h ) (-) t"~ r�� p ' t n l'; c; n ,"'\ v i-0\ b 'J e c; e t IJ o i n 65 41 - --- .......l . ~. ~=�. 4.3.... ... -��- t;r-,~ boof<s of .::\cco unts rPnrPsP nt i nn ~xo en ses for t: t' ;'\ v P J l i n n e x n en s e s � n ot c; 1..1 n p o t ' t e d by invoices 01'' 1'' e c e i n t ~; t o s h o w t h e n a me s o F t h e D e t'' s n n s t o wh o m t h e ~ ~me were incurred duri n g tg75 ( ('' ) Tpl~,~~ donri't i.n n and rPnresenta~ion exoense s <l <:> cj 'J c �!~ ~, d a s n .=~ t' �I~ n f n e n e t' a l anrl a d ministrative Pxoenses in 1975 which were '�m <; u " o o t' t e c! h v i. n v o i c e s o t' t'f'C e i Dt S rot~l Dis0l ~o wP0 Donatio n and Reoresentatio n E Mo enses
DECISION C TA CRSE NO. 3405 - 20 - r.::rpt: :i!: iont>J' nn t;he other' hand failed to Dt'Psent anv P v i d P n c e t o s 1 1r~ P o Y' t i. t: c:. c l. �""1 i m t h '"' t t h �i. s a mo u n t t' e D t' e 5 e n t s to i. t <.; fnt' athletic r� <: c 1' F '" ~: :i o TF�' I act i v i. +.: i e c; s u. c h a 5 b o w 1 i n o ~ e x c u t' 5 i o n , d i 5 c o .:~ n d f e 1. l o v-1 s h ~- o T"l ~- D h t s � The advances v-Jet'e 1 id uid at ed and t"" P c~ e j. c t ~:: ., wh f:' Tl ~ v e t"' i=:\ v r':l i l a b 1 e . we t ... e s u Y' ,.... e n c1 P .,.... E? d . Bus or t '" :�< i f ;::n' e c:. ~ -~~ i o s t o t.-: a. i t e t' s , 5 n a c k 5 and 5 m;::' J. J. t�� e s t aut' ant h i 1 I <; ~'-~ r>. 1' p P o t t' e c e i. u t e d b u t w e ,., e a o n t' o v e d b y o e t i. t i P n r> r' nlld c .1. ;;, :i. me el {".:.1..C. to its income. Deductions are matters of leqislative orace. One who c 1 ;::-, :!. 1T1 ~; ent; :i.tle men t t h P.t'Pt 0 m1..1st ooint to S OJTie sD ecifi.c r.:w nv i <:;i. �Jn s (If th(" st ,::~tute i n which that deduction is c:".\1..\thnl'i :::ed c'l nd mu�;t OI'OVe that he is entitled to the derl�..1ct�i. nn�; IAihich the l a w allows. [~9~55 PH_ Fe. _Ta>< Cot..wse, Qrit' . jF\(1 .1.01 T h e t"' e n u i. <:, i. t e s f o t�' rl e ri 11 c t i. b i l i t y o f b u s i n e s s e x o e n s e s 1: r.; r-: c. 30 <<"-) � l'-1I ~~r:; J a. The expenses mu st be ordi nary an d nece5sarv; h .. I t mu s t h. e o c"'l i. rl o t' i n r:: 1.1 t' t ' e d d '.H~ i n ~1 t h e t a >< a h 1 e v e c.:w n f? r .. e r; '" '" r� ' i n c r<. t�' 1' v i n n n n 21 n y � t t' ad e o t' b s 1..1 i n e s s ; an d dPdur~-1: i Pn. P e t: i t: �i o n P t ' fai.lPrl to show the t' e a �.t i t' e men t . T! l " '~ . th<> r~ n,_wt .:~nt��ees tn the e>< a min et' ' 5 findinqs t~e).ative 160
DECISION CTA CASE NO. 3405 - 21 - �i �ro Y'P C'-"'.n.� "'"; '\' '"' te . Aft e r considerino the unallowable thr.> fn:ll. () w �iq n r � nmn ,, �l~ ,7.lt �ion~ Not l..o "� c; O<:lt' t'Pt 11r n {P2'34 ! 4 2 5 . (1(1 ) P.clt4: Lln =\l.Jo~�J.:\'J]p L'erl,_. ctjflns & .!5.~~ .!3.~~- ~?_ P~rlitinn~l TnrnmP: <E1.~�..:...�?~1?-~-=~~, > (a) Un <4 ecl.:J.l'P.d incn!TIE' NIL saloc; nf sr.t�an� mat E'l'ial s Tott=d income P103.028.'3G /1mcu_tn "t n�nn ,�tpfi 101~'3 .3 8.(11) P l . 090. 9E, 85!547 . 81 <b) Vat'j ou<o '.tns' .l'l oo~�ted excenses (c) Donations & reoresentation P x oen s es <uns'.'r.o ot��ted ) 1\ipt Loss Tax Due nftet' t a fdTHl in t o co n sid eJ�' atl.on thP Co r.n-t' s findi n qs, � i.t apoeal'S ft � um the foy� eooin~J c om outation t h at oetitionet' ~;till :i. ncut��t�� pcl a lo s s. Th�.l S, no deficiency income tax s h0ll bP due f ro m net it i onPr. 19 75 Defici e ncy Wi thholdin g Tax on Wa g es thP. second cJuat��t e1�' encli n q June 30, 1975, ,��p c: r,nnr-lr-ni': .7.! llr>ner.l tht�\ 4~ al.thnr.toh Of'tit:inn_Pt' hFI_d dedttctP.rl Fin d tAJithhelr:f the tot a 1 amount of it on l y t'Pilli. ttPcJ the a 1nnt .tnt of' P:L3,f.Jt.~=-~.72. Th e rli f fpre n ce nf r:��1 1 l ., fl ;�=:< l . UO t��"' rn�� r.> sen+; s the urn� em i t t e d w :it h h o 1 din o taxes f o l'' th e se c~ n d ou2r ter of 1975. (E xh. 3- ~! BIR record.] ~ D�_w i n n t h e t t' i a l � n P t: i +: i. n n e t' m� f.l s en t P rl t h e f o 1 l o w i n q d cc�.1mPnt '"'�� v evidPnce nt' n v e actual t' P m j ttance o f 1�J "it h h n 1. d j n n t M >< e s ~
DECISION CTA CASE NO. 3405 - 22 - chPC I�<S of petit i one1~ showing the C o IT' m i s c; i n n P ~�� o f I n �t e '"~ n a l R e v P. n u e a s P a y e e [ E x h s � J , J- 1, J -� ;::: 2. n c~ J -� ::.u : b . � T a )< Pi::w meqt (..)ccentance or~det' all in the name of o (' t i. t; i on e ,., f u l 1 v r~ e c e i v e d by r~ e s pond en t ' s office [Ex h s. K, c. Cac; h Vouche t~s to sunoo r~t said payments in favor~ nf re snon d ent [ E~ hs . L. L-1. L-2 and L -3 ]. Reso o ndent for hi~ OF\rt did not oresent any evidence . . _l; n 1���efutn the sr.~ m e. T.n fact. t~e s oondent -c�oncetles to the ad mi c.: s j n n o f r:J e t j t i o n e r~ ' s e v i d e n c e � Having accomPlished i t s q o a J. , We a r~ e con v i n c e d t hat pet i t i on e r~ h a s act u a 1 1 y r~ e mi -t t P d t o t h e 1�~ e s r:J o n d e n t t h e w i t h h o 1 cl i n g t C\ x e s d u e t h e o o v e t~ n me n t . lhe withh old ing tax assessment should therefore he cancelled. Si nce no deficiency income and withholding taxes are due from pet i tioner, t he discussion of the second and t h it'd i s sue i s moot. S till to t'efute � the contention of t ' e s P o n d e n t that petitioner failed to file i t s fit~st, sec ond ."\ nr1 thil�' ri ouat~ te r�s income tax r�etut�n, petitioner~ D1��ese�1ted in evi. dence said r�ettwns showinq the BIR stamp 1���ecei ots <"'n rl the dr..te when t'esoondent's offi.ce r~P.c-eived th r> same . LF >< h. A. A-i and A-- ;:::, J It anoarent that oetiti oner did not violate the Provisions of n )�' P '" �i r! '�' n �t~ j r:l 1 D e c t' ~? e N o � dated October 27, 1972 as
DEC ISION CTA CASE NO. 3405 - 23 - i. mnJ r> mE�nt�:p ri b y R e ve n _te Heoulatio n s No . d a t ed D e r.' P mh ~" t ' 1 � WHEREFORE ~ in view of th~ foregoing, respondent's decision is hereby SET ASIDE. The Deficiency Income and Withholdinq Tax Assessments in the amounts of P42B,697.60 and P18, 787. 14, respectively, for the yeal'"' ending December 31, 1975 and t he P300.00 compromise penalty issued and i mposed by respo ndent are hereby CANCELLED. No costs of suits. SO ORDERED. Quezon City, Metro Manila, March 9, 1993. ~......:.:;:: IQL G'~ ERNESTO D. ACOSTA Associate Judge I I
DECISlnN CTA CASE NO. 3405 - 24 - CERTIFICATION I het~eby certify that this decision was t~eached after due consultation a monQ the members of the Com~t of Tax Aopeals in accordance with Section 13, Article VIII of the Con~t _itution. ~.'i:;Q... ~ ERNESTO D. ACOSTA Pt~esiding Judqe Court of Tax Appeals
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